THE PEOPLE OF THE STATE OF NEW YORK ex rel. BUFFALO AND LAKE ERIE TRACTION COMPANY, Relator,
EGBURT E. WOODBURY and Others, Composing the State Board of Tax Commissioners, and the STATE BOARD OF TAX COMMISSIONERS OF THE STATE OF NEW YORK, Respondents.
CERTIORARI issued out of the Supreme Court and attested on the 23d day of February, 1910, directed to Egburt E. Woodbury
and others, composing the State Board of Tax Commissioners, and the State Board of Tax Commissioners of the State of New York, requiring said Board to certify and return to the office of the clerk of the county of Albany all and singular the proceedings had in determining the amount of mortgage tax reapportioned by them under section 260 of the Tax Law (Consol. Laws, chap. 60; Laws of 1909, chap. 62) on account of the mortgaged property being partly within and partly without the State of New York.
Daniel J. Kenefick and Howard S. Jones, for the relator.
Irving D. Vann, Deputy Attorney-General, and Thomas Carmody, Attorney-General, for the respondents.
The relator is an electric surface railroad and operates and owns property in Erie and Chautauqua counties in the State of New York and in the State of Pennsylvania. On November 1, 1906, it executed a trust mortgage to secure an issue of bonds in the amount of $12,000,000, covering the property situated in both States, and such as might be acquired in the future. At the time this mortgage was recorded $4,500,000 had been advanced, and there not having been any determination of the State Board of Tax Commissioners as to the relative proportional value of the mortgaged property within the State and without, the relator filed a statement, as provided by section 260 of the Tax Law (Consol. Laws, chap. 60; Laws of 1909, chap. 62) setting forth that approximately one-third of the property of the relator covered by the mortgage was situated within the State of New York and the mortgage tax on that portion of the money which had been advanced was paid. About one year later the State Board of Tax Commissioners, after a hearing had been had, determined that only approximately one-fifth of the property covered by the mortgage was located within the State and fixed the recording tax at a less amount and directed that the overpayment be returned to the relator. Thereafter and during the years 1907, 1908 and 1909, various advancements under the mortgage were made aggregating
$1,870,000, and as these advancements were made and bonds issued the relator paid the recording tax at the rate which had been fixed by the Tax Board. The original advancement and the subsequent ones were used by the relator in purchasing additional properties, the proportion of such purchase being greater in the State of New York than in the State of Pennsylvania. Thereupon the State Board of Tax Commissioners, of its own motion, upon notice to the relator, but against its protest, proceeded to redetermine the relative value of the property located within the State, and it decided that at the time of the last advancement on the 21st of April, 1909, the proportion within this State was slightly more than two-thirds of the total value of property in both States, and directed the relator to pay $16,765.76 as a recording tax in addition to what it had already paid. This conclusion was reached by ascertaining such proportional value at the time of the last advancement, ignoring the prior determination when the first advancement was made and disregarding the proportional values at the time the intermediate advancements on the mortgage were made.
The relator sued out certiorari to review such determination and insists that the State Board of Tax Commissioners had no power of its own motion to redetermine the proportion of property within the State or to readjust the tax, and that if it did have such power it had no right to set aside its former determination, which was binding as to all advancements prior thereto as well as to all advancements under the mortgage made subsequently, the recording tax upon which had been paid in reliance thereon and without objection; and, if this position is not wholly sound that at least the first determination was binding to all advancements on the mortgage made prior thereto.
The respondent maintains that the first determination had no binding force because the mortgage must be considered as an entirety, and that the State Board of Tax Commissioners has the right to readjust and fix the recording tax from time to time as advancements are had, giving credit for such payments as have been made thereon.
Section 259 of the Tax Law provides that where a trust
mortgage is executed to secure the payment of bonds issued or to be thereafter issued, if the total amount thereof has not been advanced before such mortgage is recorded, the recording tax may be paid upon the amount advanced and as advanced from time to time.
Section 260 provides that where the real property covered by the mortgage is located partly within the State and partly without the State, it shall be the duty of the State Board of Tax Commissioners to determine what proportion shall be taxable under the Recording Tax Act by determining the relative value of the mortgaged property within this State as compared to the total value of the entire mortgaged property, and that if a mortgage shall be presented for record before such determination has been made the mortgagor shall file a verified statement specifying the relative value of the property within and without the State, and that upon receipt of such statement the State Board of Tax Commissioners, on notice, shall 'proceed to determine what proportion of the principal indebtedness secured by the mortgage shall be used as the measure of taxation within the State under the provisions' of the Recording Tax Act.
Although section 259 provides that the recording tax upon a trust mortgage may be paid from time to time as advances thereon are made, section 260 does not specifically provide that where the mortgaged property lies partly within and partly without the State the State Board of Tax Commissioners may apportion the same as advances on such a mortgage shall be made. The strict reading of section 260 confines the board in such case to a determination made at the time the mortgage is given. That section in another part, however, does provide that it shall be the duty of the State Board of Tax Commissioners, where a mortgage covers property situated in more than one county, to apportion the recording tax to be paid to the respective recording officers, and where one recording officer has received the tax, they may determine ...